Question Bank

Q1) Define Contract of Sale of Goods Act?

A1)The Indian Sale of Goods Act, 1930 is a mercantile law which came into existence on 1 July 1930,[1][2] during the British Raj, borrowing heavily from the United Kingdom's Sale of Goods Act 1893. It provides for the setting up of contracts where the seller transfers or agrees to transfer the title (ownership) in the goods to the buyer for consideration. It is applicable all over India. Under the act, goods sold from owner to buyer must be sold for a certain price and at a given period of time. The act was amended on 23 September 1963, and was renamed to the Sale of Goods Act, 1930.

Q2) Differentiate between sale and agreement to sell?

A2)

(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owner and another.

(2) A contract of sale may be absolute or conditional.

(3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell.

(4) An agreement to, sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred

Q3) Define Conditions And Warranties

A3) Condition and Warranties

(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.

2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.

(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but not to a right to reject the goods and treat the contract as repudiated.

(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract.

Q4) What are the provisions related to transfer of ownership in goods including sale by non owner ?

A4) Transfer of ownership in goods including sale by non-owner.

A Latin maxim says: ‘Nemo dat quod non habet’ which means that no one can

Give what he doesn’t have. This is the ground principle regarding the transfer of

Title. Sections 27 to 30 of the Sale of Goods Act, 1930 specify these laws about the

Transfer of title.

Transfer of Title

Section 27 deals with the sale by a person who is not the owner. Imagine a

Sale contract where the seller –

Is not the owner of the goods

Does not have consent from the owner to sell the goods

Has not been given authority by the owner to sell the goods on his behalf

In such cases, the buyer acquires no better title to these goods than the seller had,

Provided the conduct of the owner precludes the seller’s authority to sell.

Exceptions to Section 27

In the following scenarios a non-owner of goods can transfer a better title to the

Buyer:

1] Sale by a Mercantile agent (Proviso to Section 27)

Consider a mercantile agent, who is in possession of the goods or a document to

The title of the goods, with the consent of the owner. Such an agent can sell the

Goods when acting in the ordinary course of business of a mercantile agent. The

Sale shall be valid provided the buyer acts in good faith and has no reason to

Believe that the seller doesn’t have any right to sell the goods. The transfer of title

Is valid in such a case.

2] Sale by one of the Joint Owners (Section 28)

Many times goods are purchased in joint ownership. In many cases, the goods are

Kept in the possession of one of these joint owners by the permission of the co-owners. If this person (who has the sole possession of the goods) sells the goods,

The property in the goods is transferred to the buyer. This is provided the buyer

Acts in good faith and has no reason to believe that the seller does not have a right

To sell the goods.

3] Sale by a Person in Possession of Goods under a Voidable

Contract (Section 29)

Consider a person who acquires possession of certain goods under a contract

Voidable on grounds of coercion, misrepresentation, fraud or undue influence. If

This person sells the goods before the contract is terminated by the original owner

Of the goods, then the buyer acquires a good title to the goods.

4] Sale by a Person who has already sold the Goods but Continues

To have Possession [Section 30 (1)]

Consider a person who has sold goods but continues to be in possession of them

Or of the documents of title to them. This person might sell the goods to another

Buyer.

If this buyer acts in good faith and is unaware of the earlier sale, then he will have

a good title to the goods even though the property in the goods was passed to the

First buyer. A pledge or other disposition of the goods or documents of title by the

Seller in possession are valid too.

5] Sale by Buyer obtaining possession before the Property in the

Goods has Vested in him [Section 30 (2)]

Consider a buyer who obtains possession of the goods before the property in them

Is passed to him, with the permission of the seller. He may sell, pledge or dispose

Of the goods to another person.

If the second buyer obtains delivery of the goods in good faith and without notice

Of the lien or any other right of the original seller, he gets a good title to them.

This rule does not hold true for a hire-purchase agreement which allows a person

The possession of the goods and an option to buy unless the sale is agreed upon.

6] Estoppel

If an owner of goods is stopped by the conduct from denying the seller’s authority

To sell, the buyer gets a good title. However, to get a good title by estoppel, it

Needs to be proved that the original owner had actively suffered or held out the

Seller in question as a person authorized to sell the goods.

7] Sale by an Unpaid Seller [Section 54 (3)]

If an unpaid seller exercises his right of lien or stoppage in transit and sells the

Goods to another buyer, then the second buyer gets a good title to the goods as

Against the original buyer. So in such a case transfer of title will occur.

Q5) Discuss the provisions relating to performance of contract of sale.

A5)

Performance of contract of sale means delivery of goods by seller and acceptance of delivery of goods and payment for the same by buyer.

• Seller’s main duty:-

Is to deliver the goods to the buyer

• Buyer’s main duty:-

To accept the goods and pay the price to the seller as per the terms of the contract

The parties are free to provide any terms in their contract regarding time, place, delivery, payment of goods and so on. But if the parties are silent and no terms are mentioned in the contract then rules contained in the sale of goods act will be applicable.

Meaning of Delivery

Voluntary transfer of possession from one person to another.

Types of Delivery:-

1. Actual Delivery

It means actual physical delivery of the goods to the buyer or his authorized agent by the seller or his authorized agent.

2. Symbolic Delivery

When goods are not physically delivered but the means of obtaining possession of goods is delivered to buyer. Symbol is used for delivery.

Example: Handing over of keys of godown where goods are safely kept etc.

3. Constructive Delivery

Third party is involved in delivery. Seller don’t deliver the goods directly.

Example: SelleràWarehouseman/ warehouse keeper àBuyer

Q6) Give the rules relating to delivery of Goods

A6)1. Payment and delivery are concurrent (performed at the same time)

Payment and delivery are concurrent, which means both should be performed at the same time unless otherwise agreed.

Example: Cash sale (this is not applicable for credit sale)

2. Delivery may be actual, symbolic or constructive

3. Effect of part delivery

If the order placed is so big and delivery of goods takes place in parts so when buyer accepts the part delivery then that means, buyer is giving the acceptance to the whole delivery.

4. Buyer to apply for delivery

Buyer should ask the seller to deliver the goods.

5. Place of delivery

Place of delivery should be specified by the parties, in case when no agreement is there/ parties are silent about it then place of contract will be considered as place of delivery.

Example: If place of contract is factory then place of delivery will also be considered as

Factory.

6. Time for delivery of goods

Delivery should be done within specified time. If no time is specified then delivery should be completed within a reasonable time.

7. Goods in possession of third party

If goods are in possession of third party like warehouseman/ warehouse keeper then seller needs to acknowledge the sale to third person like warehouseman who will then deliver the goods to buyer.

8. Expenses of delivery

Seller will borne all the expenses to bring the product to deliverable state and for obtaining the delivery, buyer will borne all the expenses.

9. Delivery of wrong quantity- either short/ excess/ mixed delivery

a) Short Delivery

Received amount is less than the ordered quantity.

Example: Ordered 100 quantity from sellerà Received 90 quantity

In this case, buyer has below mentioned options:

i) Reject the goods

Ii) Accept the goods- But if he accepts the goods so delivered then he is bound to pay for them at the contract price.

b) Excess Delivery

Received amount is more than the ordered quantity.

Example: Ordered 100 quantity from sellerà Received 110 quantity

In this case, buyer has below mentioned options:

i) Reject the whole goods

Ii) Accept the whole goods

Iii) Accept the contracted quantity of goods i.e 100 and reject the rest i.e 10

c) Mixed Delivery

It means goods delivered have the goods of different description as well then contracted for.

Example: Ordered 100 quantity from sellerà Received 50 quantity matches to the specified description during the contract and 50 quantity does not match with the description

In this case, buyer has below mentioned options:

i) Reject the whole goods

Ii) Accept the contracted goods and reject the rest- If the buyer accepts the whole goods then he can’t sue the seller for delivering the mixed goods

10. Instalment Deliveries

If parties agree to get the goods in instalments then buyer is bound to accept the delivery thereof by instalments.

Parties are not bound to deliver the goods in instalments unless agreed.

11. Delivery to the carrier/ courier company

If seller gives the goods to carrier/ courier company to deliver the same to the buyer then that does not means that goods are delivered to buyer, it will be considered in transit unless delivered to the buyer actually.

12. Buyer has the right to examine the goods

After examining, if buyer is satisfied then buyer can keep the goods.

After examining, if buyer is not satisfied then buyer can reject the goods.

Q7) Who is an unpaid seller?

A7)

“Unpaid seller” defined.

(1) The seller of goods is deemed to be an "unpaid seller" within the meaning of this Act—

(a) when the whole of the price has not been paid or tendered;

(b) when a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or otherwise.

(2) In this Chapter, the term "seller" includes any person who is in the position of a seller, as, for instance, an agent of the seller to whom the bill of lading has been endorsed, or a consignor or agent who has himself paid, or is directly responsible for, the price.

Q8) What are the rights of an unpaid seller?

A8) Unpaid seller’s rights.

(1) Subject to the provisions of this Act and of any law for the time being in force, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods, as such, has by implication of law—

(a) a lien on the goods for the price while he is in possession of them;

(b) in case of the insolvency of the buyer a right of stopping the goods in transit after he has parted with the possession of them;

(c) a right of re-sale as limited by this Act.

(2) Where the property in goods has not passed to the buyer, the unpaid seller has, in addition to his other remedies, a right of withholding delivery similar to and co-extensive with his rights of lien and stoppage in transit where the property has passed to the buyer.